Transforming the Value Chain


There are very dramatic transformations happening within the business functions of a firm's value chain. Probably nowhere is it more dramatic than what's happening within engineering.

  • Product Development - We're asking the engineers to create a fundamentally different product in a fundamentally different way. For example, we're not only concerned anymore about the physical product. We're now concerned about the digital elements of the product, the part that's on premise with the product and the part that runs in the cloud.Then, we're reconsidering the way that products are delivered. We've always thought of products as being developed in discrete generation where big changes were batched up into the new-year model. Then the new-year model was released and we never touched it again. Now, we're thinking about products being evergreen, where we're putting a product out in the field and then continuously updating it, a much more agile development process and a product that continues to change long after it's delivered to the customer. It's a very dramatic change to the engineering and manufacturing processes associated with products. 

  • After-Sales Service - There are other parts of a firm's value chain that are undergoing pretty dramatic changes too because of smart, connected products. A classic example is the service department. A service department now has this feedback loop of data and can use analytics to understand what's happening with the product. That allows them then to adopt a proactive service posture where the goal becomes to prevent products from failing rather than to fix them after they do. 

  • Marketing and Sales - Another place we're seeing big changes are in the way that products are sold and marketed. For example, understanding how products are used by different customers and then having the ability to tweak their digital componentry gives you a much finer grain segmentation capability to deliver slightly different product configurations into slightly different constituencies. This feedback loop into engineering, manufacturing, sales, service really brings with it some dramatic implications for the type of work and the type of operations that these functions execute every day. 

  • Security - Within product companies until recently security was a problem that the IT department was supposed to solve. If we look at the implications of smart, connected products, it's a much bigger challenge which quite frankly involves many departments within the company. Each smart connected product really represents a potential vulnerability or a point of attack for hackers and so forth. I think we need to think of security as a more fundamental capability of a good product now, as opposed to something that the IT department is responsible for.